WYNN RESORTS, LIMITED The following discussion should be read in conjunction with, and is qualified in its entirety by, the condensed consolidated financial statements and the notes thereto included elsewhere in this Form 10-Q and the consolidated financial statements appearing in our annual report on Form 10-K for the year endedDecember 31, 2020 . Unless the context otherwise requires, all references herein to the "Company," "we," "us," or "our," or similar terms, refer toWynn Resorts, Limited , aNevada corporation, and its consolidated subsidiaries. This discussion and analysis contains forward-looking statements. Please refer to the section below entitled "Forward-Looking Statements."
Overview
We are a designer, developer, and operator of integrated resorts featuring
luxury hotel rooms, high-end retail space, an array of dining and entertainment
options, meeting and convention facilities, and gaming, all supported by an
unparalleled focus on our guests, our people, and our community. Through our
approximately 72% ownership of Wynn Macau, Limited ("WML"), we operate two
integrated resorts in the Macau Special Administrative Region of the People's
Republic of China ("Macau"), Wynn Palace and Wynn Macau (collectively, our
"Macau Operations"). In Las Vegas, Nevada , we operate and, with the exception of
certain retail space, own 100% of Wynn Las Vegas . Additionally, we are a 50.1%
owner and managing member of a joint venture that owns and leases certain retail
space at Wynn Las Vegas (the "Retail Joint Venture"). We refer to Wynn Las
Vegas , Encore, an expansion at Wynn Las Vegas , and the Retail Joint Venture as
our Las Vegas Operations. On June 23, 2019 , we opened Encore Boston Harbor , an
integrated resort in Everett, Massachusetts . In October 2020 , Wynn Interactive
Ltd. ("Wynn Interactive") was formed through the merger of our U.S. online
sports betting and gaming business, social casino business, and our strategic
partner, BetBull Limited ("BetBull"). Wynn Resorts holds an approximately 74%
interest in, and consolidates, Wynn Interactive. The results of Wynn Interactive
are presented within Corporate and other.
Recent Developments Related to COVID-19
Since the outbreak of COVID-19 in early 2020, steps have been taken by various countries, including those in which the Company operates, to advise citizens to avoid non-essential travel, to restrict inbound international travel, to implement closures of non-essential operations, and to implement quarantines and lockdowns to contain the spread of the virus. As part of the immediate response to the initial outbreak of COVID-19, each of the Company's properties was subject to partial or full closure for varying lengths of time during 2020. Several vaccines have been granted authorization in numerous countries and are being rolled out to citizens based on availability and priority of need. There can be no assurance as to when a sufficient number of individuals will be vaccinated, or when travel restrictions may be fully lifted thereafter.
Macau Operations
Visitation toMacau has fallen significantly since the outbreak of COVID-19, driven by the strong deterrent effect of the COVID-19 pandemic on travel and social activities, quarantine measures put in place inMacau and elsewhere, travel and entry restrictions and conditions inMacau , the PRC,Hong Kong andTaiwan involving COVID-19 testing, among other things, and the suspension or reduced accessibility of transportation to and fromMacau . Beginning inJune 2020 , certain restrictions and conditions have eased to allow for visitation toMacau as certain regions recover from the COVID-19 pandemic. Quarantine-free travel, subject to COVID-19 safeguards such as testing and the usual visa requirements, has been reintroduced betweenMacau and most areas and cities within the PRC, and inSeptember 2020 , PRC authorities fully resumed the IVS exit visa program, which permits individual PRC citizens from nearly 50 PRC cities to travel toMacau for tourism purposes. Total visitation from PRC toMacau increased meaningfully in the nine months endedSeptember 30, 2021 compared to the same period in 2020. Total visitation decreased 75.6% compared to the same period in 2019. Given the evolving conditions created by and in response to the COVID-19 pandemic, measures that have been lifted may be reintroduced if there are adverse developments in the COVID-19 situation inMacau and other regions with access toMacau , and the Company is currently unable to determine when protective measures and the suspension of certain offerings in effect at our Macau Operations will be lifted. Given the uncertainty around the extent and timing of the potential future spread or mitigation of COVID-19 and around the imposition or relaxation of protective measures, management cannot reasonably estimate the impact to the Company's future results of operations, cash flows, or financial condition. 25
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Las Vegas Operations and
In response to the COVID-19 outbreak, the Company's Las Vegas Operations andEncore Boston Harbor each implemented certain COVID-19 specific protective measures, such as limiting the number of seats per table game, slot machine spacing, temperature checks, mask protection, and suspension of certain entertainment and nightlife offerings. Over the course of the nine months endedSeptember 30, 2021 , the Company's Las Vegas Operations andEncore Boston Harbor have each incrementally resumed full operations, including reopening gaming areas to 100% of capacity and restoring seven-day-per-week hotel operations, as permitted by governmental authorities and in response to increased customer demand. Given the evolving conditions created by and in response to the COVID-19 pandemic, measures that have been lifted may be reintroduced if there are adverse developments in the COVID-19 situation, and management cannot reasonably estimate the impact of such developments to the Company's future results of operations, cash flows, or financial condition.
Macau Gaming Concession
The term of the Company's concession agreement with theMacau government ends onJune 26, 2022 . If the term of this concession agreement is not extended or renewed or is not replaced by a new gaming concession, all of the Company's gaming operations and related equipment inMacau will be automatically transferred to theMacau government without compensation on that date and the Company will cease to generate gaming revenues from its Macau Operations. In addition, under the indentures governing the Company's$4.7 billion aggregate principal amount of WML Senior Notes and the facility agreement governing the WM Cayman II Revolver, upon the occurrence of any event after which the Company does not own or manage casino or gaming areas or operate casino games of fortune and chance inMacau in substantially the same manner as of the issue date of the respective senior notes or the date of the facility agreement, for a period of 10 consecutive days or more in the case of the WML Senior Notes or a period of 30 consecutive days or more in the case of the WM Cayman II Revolver, and such event has a material adverse effect on the financial condition, business, properties or results of operations of WML and its subsidiaries, taken as a whole, holders of the WML Senior Notes can require the Company to repurchase all or any part of the WML Senior Notes at par, plus any accrued and unpaid interest (the "Special Put Option"), and any amounts owed under the WM Cayman II Revolver may become immediately due and payable (the "Property Mandatory Prepayment Event"). The Company is monitoring developments with respect to theMacau government's concession renewal or extension process, and at this time believes that its concession will be renewed or extended beyondJune 26, 2022 . The failure to extend or renew the Company's concession or obtain a new concession and the resulting ability of the WML Senior Note holders to exercise the Special Put Option and triggering of the Property Mandatory Prepayment Event would have a material adverse effect on the Company's business, financial condition, results of operations, and cash flows.
Key Operating Measures
Certain key operating measures specific to the gaming industry are included in our discussion of our operational performance for the periods for which the Condensed Consolidated Statements of Operations are presented. These key operating measures are presented as supplemental disclosures because management and/or certain investors use these measures to better understand period-over-period fluctuations in our casino and hotel operating revenues. These key operating measures are defined below: •Table drop in mass market for our Macau Operations is the amount of cash that is deposited in a gaming table's drop box plus cash chips purchased at the casino cage. •Table drop for our Las Vegas Operations is the amount of cash and net markers issued that are deposited in a gaming table's drop box. •Table drop forEncore Boston Harbor is the amount of cash and gross markers issued that are deposited in a gaming table's drop box. •Rolling chips are non-negotiable identifiable chips that are used to track turnover for purposes of calculating incentives within our Macau Operations' VIP program. •Turnover is the sum of all losing rolling chip wagers within ourMacau Operations' VIP program. •Table games win is the amount of table drop or turnover that is retained and recorded as casino revenues. Table games win is before discounts, commissions and the allocation of casino revenues to rooms, food and beverage and other revenues for services provided to casino customers on a complimentary basis. Table games win does not include poker rake. 26
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•Slot machine win is the amount of handle (representing the total amount
wagered) that is retained by us and is recorded as casino revenues. Slot machine
win is after adjustment for progressive accruals and free play, but before
discounts and the allocation of casino revenues to rooms, food and beverage and
other revenues for services provided to casino customers on a complimentary
basis.
•Poker rake is the portion of cash wagered by patrons in our poker rooms that is
retained by the casino as a service fee, after adjustment for progressive
accruals, but before the allocation of casino revenues to rooms, food and
beverage and other revenues for services provided to casino customers on a
complimentary basis. Poker tables are not included in our measure of average
number of table games.
•Average daily rate ("ADR") is calculated by dividing total room revenues,
including complimentaries (less service charges, if any), by total rooms
occupied.
•Revenue per available room ("REVPAR") is calculated by dividing total room
revenues, including complimentaries (less service charges, if any), by total
rooms available.
•Occupancy is calculated by dividing total occupied rooms, including
complimentary rooms, by the total rooms available.
Below is a discussion of the methodologies used to calculate win percentages at our resorts.
In our VIP operations inMacau , customers primarily purchase rolling chips from the casino cage and can only use them to make wagers. Winning wagers are paid in cash chips. The loss of the rolling chips in the VIP operations is recorded as turnover and provides a base for calculating VIP win percentage. It is customary inMacau to measure VIP play using this rolling chip method. We expect our win as a percentage of turnover from these operations to be within the range of 2.7% to 3.0%. In our mass market operations inMacau , customers may purchase cash chips at either the gaming tables or at the casino cage. The measurements from our VIP and mass market operations are not comparable as the measurement method used in our mass market operations tracks the initial purchase of chips at the table and at the casino cage, while the measurement method from our VIP operations tracks the sum of all losing wagers. Accordingly, the base measurement from the VIP operations is much larger than the base measurement from the mass market operations. As a result, the expected win percentage with the same amount of gaming win is lower in the VIP operations when compared to the mass market operations. InLas Vegas , customers purchase chips at the gaming tables in exchange for cash and markers. Customers may then redeem markers at the gaming tables or at the casino cage. The cash and markers, net of redemptions, used to purchase chips are deposited in the gaming table's drop box. This is the base of measurement that we use for calculating win percentage. Each type of table game has its own theoretical win percentage. Our expected table games win percentage is 22% to 26%. AtEncore Boston Harbor , customers purchase chips at the gaming tables in exchange for cash and markers. Customers may then redeem markers only at the casino cage. The cash and gross markers used to purchase chips are deposited in the gaming table's drop box. This is the base of measurement that we use for calculating win percentage. Each type of table game has its own theoretical win percentage. Our expected table games win percentage is 18% to 22%. 27
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Table of Contents Results of Operations
Summary of third quarter 2021 results
The following table summarizes our financial results for the periods presented (in thousands, except per share data):
Three Months Ended Nine Months Ended
September 30, September 30,
Increase/ Increase/
2021 2020 (Decrease) Percent Change 2021 2020 (Decrease) Percent Change
Operating revenues
168.5 $ 2,721,439 $ 1,409,866 $ 1,311,573 93.0
Net loss attributable to
Wynn Resorts, Limited (166,249) (758,142) 591,893 78.1 (578,596) (1,797,743) 1,219,147 67.8
Diluted net loss per share (1.45) (7.10) 5.65 79.6 (5.10) (16.85) 11.75 69.7
Adjusted Property EBITDA(1) 154,561 (65,860) 220,421 NM 420,341 (394,086) 814,427 NM NM - Not meaningful. (1) See Item 1-"Financial Statements," Note 17, "Segment Information," for a reconciliation of Adjusted Property EBITDA to net loss attributable toWynn Resorts, Limited . The increase in operating revenues for the three months endedSeptember 30, 2021 was primarily driven by increases of$165.6 million ,$79.3 million ,$289.3 million , and$75.5 million fromWynn Palace , Wynn Macau, ourLas Vegas Operations, andEncore Boston Harbor , respectively, as a result of increased gaming volumes across our properties as well as an increase in hotel occupancy at our Las Vegas Operations. The decrease in net loss attributable toWynn Resorts, Limited for the three months endedSeptember 30, 2021 was primarily related to increased operating revenues at our integrated resort properties, partially offset by increased operating expenses. The increase in Adjusted Property EBITDA for the three months endedSeptember 30, 2021 was primarily driven by increased operating revenues at our integrated resort properties. Adjusted Property EBITDA increased$89.8 million ,$32.5 million ,$163.2 million , and$38.6 million atWynn Palace , Wynn Macau, our Las Vegas Operations, andEncore Boston Harbor , respectively, and decreased$103.6 million at Corporate and other. In addition, Adjusted Property EBITDA for the third quarter of 2021 includes the reversal of$8.6 million and$8.1 million of previously accrued operating expenses atWynn Palace and Wynn Macau, respectively, recorded in relation to a change in estimate. 28
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Financial results for the three months ended
Operating revenues
The following table presents our operating revenues (in thousands):
Three Months Ended September 30,
Increase/ Percent
2021 2020 (Decrease) Change
Operating revenues
Macau Operations:
Wynn Palace $ 181,323 $ 15,701 $ 165,622 1,054.9
Wynn Macau 130,662 51,368 79,294 154.4
Total Macau Operations 311,985 67,069 244,916 365.2
Las Vegas Operations 476,003 186,697 289,306 155.0
Encore Boston Harbor 192,214 116,686 75,528 64.7
Corporate and other 14,442 - 14,442 NM
$ 994,644 $ 370,452 $ 624,192 168.5
NM - Not meaningful.
The following table presents our casino and non-casino operating revenues (in
thousands):
Three Months Ended September 30,
Increase/ Percent
2021 2020 (Decrease) Change
Operating revenues
Casino revenues $ 496,264 $ 201,872 $ 294,392 145.8
Non-casino revenues:
Rooms 173,817 61,144 112,673 184.3
Food and beverage 217,501 76,586 140,915 184.0
Entertainment, retail and other 107,062 30,850 76,212 247.0
Total non-casino revenues 498,380 168,580 329,800 195.6
$ 994,644 $ 370,452 $ 624,192 168.5
Casino revenues for the three months ended September 30, 2021 were 49.9% of
operating revenues, compared to 54.5% for the same period of 2020. Non-casino
revenues for the three months ended September 30, 2021 were 50.1% of operating
revenues, compared to 45.5% for the same period of 2020.
Casino revenues
Casino revenues increased primarily due to increased table drop, table games win and slot machine win at our Las Vegas Operations andEncore Boston Harbor respectively, and increased VIP turnover and table games win and mass market table drop, table games win and slot machine win at our Macau Operations.Encore Boston Harbor was closed to the public fromMarch 15, 2020 untilJuly 10, 2020 .
The table below sets forth our casino revenues and associated key operating measures (dollars in thousands, except for win per unit per day):
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Three Months Ended September 30,
Increase/ Percent
2021 2020 (Decrease) Change
Macau Operations:
Wynn Palace:
Total casino revenues $ 134,064 $ 12,301 $ 121,763 989.9
VIP:
Average number of table games 89 102 (13) (12.7)
VIP turnover $ 1,234,733 $ 311,676 $ 923,057 296.2
VIP table games win $ 54,943 $ 3,244 $ 51,699 1,593.7
VIP win as a % of turnover 4.45 % 1.04 % 3.41
Table games win per unit per day $ 6,691 $ 347 $ 6,344 1,828.2
Mass market:
Average number of table games 231 223 8 3.6
Table drop $ 508,779 $ 86,347 $ 422,432 489.2
Table games win $ 110,820 $ 19,015 $ 91,805 482.8
Table games win % 21.8 % 22.0 % (0.2)
Table games win per unit per day $ 5,223 $ 929 $ 4,294 462.2
Average number of slot machines 712 569 143 25.1
Slot machine handle $ 327,017 $ 78,580 $ 248,437 316.2
Slot machine win $ 11,538 $ 3,995 $ 7,543 188.8
Slot machine win per unit per day $ 176 $ 76 $ 100 131.6
Wynn Macau:
Total casino revenues $ 98,264 $ 27,154 $ 71,110 261.9
VIP:
Average number of table games 75 91 (16) (17.6)
VIP turnover $ 1,335,694 $ 498,519 $ 837,175 167.9
VIP table games win $ 32,602 $ 19,679 $ 12,923 65.7
VIP win as a % of turnover 2.44 % 3.95 % (1.51)
Table games win per unit per day $ 4,704 $ 2,351 $ 2,353 100.1
Mass market:
Average number of table games 238 240 (2) (0.8)
Table drop $ 441,899 $ 133,006 $ 308,893 232.2
Table games win $ 87,132 $ 24,898 $ 62,234 250.0
Table games win % 19.7 % 18.7 % 1.0
Table games win per unit per day $ 3,972 $ 1,128 $ 2,844 252.1
Average number of slot machines 574 472 102 21.6
Slot machine handle $ 200,543 $ 87,988 $ 112,555 127.9
Slot machine win $ 9,142 $ 3,072 $ 6,070 197.6
Slot machine win per unit per day $ 173 $ 71 $ 102 143.7
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Three Months Ended September 30,
Increase/ Percent
2021 2020 (Decrease) Change
Las Vegas Operations:
Total casino revenues $ 112,575 $ 65,694 $ 46,881 71.4
Average number of table games 224 223 1 0.4
Table drop $ 507,188 $ 324,939 $ 182,249 56.1
Table games win $ 110,265 $ 65,611 $ 44,654 68.1
Table games win % 21.7 % 20.2 % 1.5
Table games win per unit per day $ 5,354 $ 3,191 $ 2,163 67.8
Average number of slot machines 1,746 1,738 8 0.5
Slot machine handle $ 1,156,858 $ 739,291 $ 417,567 56.5
Slot machine win $ 80,303 $ 48,267 $ 32,036 66.4
Slot machine win per unit per day $ 500 $ 302 $ 198 65.6
Poker rake $ 2,910 $ 10 $ 2,900 NM
Encore Boston Harbor :
Total casino revenues $ 151,361 96,723 $ 54,638 56.5
Average number of table games 181 186 (5) (2.7)
Table drop $ 350,145 $ 217,797 $ 132,348 60.8
Table games win $ 74,818 $ 47,528 $ 27,290 57.4
Table games win % 21.4 % 21.8 % (0.4)
Table games win per unit per day $ 4,498 $ 3,079 $ 1,419 46.1
Average number of slot machines 2,734 1,877 857 45.7
Slot machine handle $ 1,196,299 $ 813,435 $ 382,864 47.1
Slot machine win $ 98,816 $ 63,458 $ 35,358 55.7
Slot machine win per unit per day $ 393 $ 407 $ (14) (3.4)
NM - Not meaningful.
Note: In response to the initial outbreak of COVID-19 in early 2020, each of our
properties was subject to partial or full closure for varying lengths of time
during 2020, and each has since reopened with certain COVID-19 specific
protective measures in place.
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Non-casino revenues
The table below sets forth our room revenues and associated key operating
measures:
Three Months Ended September 30,
Increase/
2021 2020 (Decrease) Percent Change
Macau Operations:
Wynn Palace:
Total room revenues (dollars in thousands) $ 15,639 $ 4,506 $ 11,133 247.1
Occupancy 51.9 % 11.6 % 40.3
ADR $ 187 $ 225 $ (38) (16.9)
REVPAR $ 97 $ 26 $ 71 273.1
Wynn Macau:
Total room revenues (dollars in thousands) $ 10,896 $ 4,938 $ 5,958 120.7
Occupancy 51.3 % 16.6 % 34.7
ADR $ 211 $ 291 $ (80) (27.5)
REVPAR $ 108 $ 48 $ 60 125.0
Las Vegas Operations:
Total room revenues (dollars in thousands) $ 132,705 $ 44,961 $ 87,744 195.2
Occupancy 83.0 % 39.2 % 43.8
ADR $ 392 $ 269 $ 123 45.7
REVPAR $ 326 $ 105 $ 221 210.5
Encore Boston Harbor (1):
Total room revenues (dollars in thousands) $ 14,578 $ 6,739 $ 7,839 116.3
Occupancy 87.8 % 72.7 % 15.1
ADR $ 351 $ 294 $ 57 19.4
REVPAR $ 308 $ 214 $ 94 43.9
(1) Encore Boston Harbor room statistics have been computed based on 69 days and
47 days of operation in the three months ended September 30, 2021 and 2020,
respectively, representing the number of nights hotel rooms were offered for
sale to the public.
Room revenues increased $112.7 million , primarily due to higher occupancy at our
Las Vegas Operations, our Macau Operations and Encore Boston Harbor . The hotel
tower at Encore Boston Harbor was closed in connection to a COVID-19 related
state directive from November 6, 2020 through January 25, 2021 , when it reopened
its hotel tower on a Thursday through Sunday weekly schedule. Encore Boston
Harbor reopened its hotel tower to seven days per week as of September 1, 2021 .
Food and beverage revenues increased
Entertainment, retail and other revenues increased
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Operating expenses
The table below presents operating expenses (in thousands):
Three Months Ended September 30,
Increase/
2021 2020 (Decrease) Percent Change
Operating expenses:
Casino $ 315,316 $ 160,861 $ 154,455 96.0
Rooms 52,100 35,940 16,160 45.0
Food and beverage 163,655 76,536 87,119 113.8
Entertainment, retail and other 156,490 13,370 143,120 1,070.5
General and administrative 197,350 160,896 36,454 22.7
Provision for credit losses (347) 11,588 (11,935) (103.0)
Pre-opening 1,333 877 456 52.0
Depreciation and amortization 177,110 183,486 (6,376) (3.5)
Property charges and other 15,301 9,905 5,396 54.5
Total operating expenses $ 1,078,308 $ 653,459 $ 424,849 65.0
Total operating expenses increased $424.8 million compared to the third quarter
of 2020, primarily due to increased casino, room, food and beverage,
entertainment, retail and other, and general and administrative expenses
associated with increased levels of business as our properties recover from the
effects of the COVID-19 pandemic, partially offset by decreased provision for
credit losses.
Casino expenses increased $69.7 million , $39.3 million , $20.0 million , and $25.4
million at Wynn Palace , Wynn Macau, our Las Vegas Operations, and Encore Boston
Harbor , respectively. These increases were primarily due to increased gaming tax
expense driven by the increase in casino revenues at each property.
Room expenses increased $13.5 million and $2.2 million at our Las Vegas
Operations and Wynn Palace . These increases were primarily a result of higher
operating costs related to the increase in occupancy.
Food and beverage expenses increased $76.1 million and $7.4 million at our Las
Vegas Operations and Encore Boston Harbor , respectively. The increases were
primarily a result of higher operating costs related to the increase in food and
beverage revenues at each property as well as higher nightlife entertainment
costs at our Las Vegas Operations.
Entertainment, retail and other expenses increased primarily due to marketing
expenses incurred by Wynn Interactive.
General and administrative expenses increased primarily due to increases of $7.5
million , $6.1 million , $5.4 million , and $5.3 million at Wynn Palace , Wynn
Macau, our Las Vegas Operations, and Encore Boston Harbor , respectively.
These increases were primarily attributable to increased payroll, operating
costs, and general and administrative expenses.
Provision for credit losses decreased $8.8 million and $3.1 million at Wynn
Palace and our Las Vegas Operations, respectively. The decreases were primarily
due to the impact of historical collection patterns and expectations of current
and future collection trends, as well as the specific review of customer
accounts, on our estimated credit loss for the respective periods.
Our property charges and other expenses for the quarter ended September 30, 2021
consisted primarily of advocacy-related expenses of $12.5 million at Wynn
Interactive. Our property charges and other expenses for the quarter ended
September 30, 2020 consisted primarily of asset abandonments of $6.2 million and
$1.1 million at Encore Boston Harbor and our Las Vegas Operations, respectively.
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Interest expense, net of capitalized interest
The following table summarizes information related to interest expense (dollars
in thousands):
Three Months Ended
September 30,
Increase/ Percent
2021 2020 (Decrease) Change
Interest expense
Interest cost, including amortization of debt
issuance costs and original issue discount and
premium $ 150,325 $ 145,142 $ 5,183 3.6
Weighted average total debt balance $ 12,044,272 $ 13,110,457
Weighted average interest rate 4.99 % 4.42 %
Interest costs increased primarily due to an increase in the weighted average interest rate.
Other non-operating income and expenses
We incurred a foreign currency remeasurement loss of$11.8 million and a gain of$0.4 million for the three months endedSeptember 30, 2021 and 2020, respectively. The impact of the exchange rate fluctuation of theMacau pataca, in relation to theU.S. dollar, on the remeasurements ofU.S. dollar denominated debt and other obligations from ourMacau -related entities drove the variability between periods.
We recorded a gain of
We recorded a$0.7 million loss on extinguishment of debt for the three months endedSeptember 30, 2021 related to the prepayment of the Wynn Macau Credit Facilities. We recorded a$3.1 million loss on extinguishment of debt for the three months endedSeptember 30, 2020 related to the partial prepayment of the Wynn Macau Term Loan. Income taxes We recorded an income tax expense of$1.2 million and$407.4 million for the three months endedSeptember 30, 2021 and 2020, respectively. The 2021 income tax expense primarily related to an increase in valuation allowance forU.S. deferred tax assets and theMacau dividend tax agreement that provides for an annual payment of MOP 12.8 million (approximately$1.6 million ) as complementary tax otherwise due by stockholders ofWynn Macau SA . The 2020 income tax expense primarily related to the increase in the valuation allowances forU.S foreign tax credits,U.S. loss carryforwards and otherU.S. deferred tax assets.
Net loss attributable to noncontrolling interests
Net loss attributable to noncontrolling interests was$79.7 million and$73.4 million for the three months endedSeptember 30, 2021 and 2020, respectively. These amounts are primarily related to the noncontrolling interests' share of net loss from WML. 34
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Financial results for the nine months ended
Operating revenues
The following table presents our operating revenues (in thousands):
Nine Months Ended September 30,
Increase/
2021 2020 (Decrease) Percent Change
Operating revenues
Macau Operations:
Wynn Palace $ 689,020 $ 283,932 $ 405,088 142.7
Wynn Macau 494,341 292,745 201,596 68.9
Total Macau Operations 1,183,361 576,677 606,684 105.2
Las Vegas Operations 1,009,785 575,407 434,378 75.5
Encore Boston Harbor 487,545 257,782 229,763 89.1
Corporate and other 40,748 - 40,748 NM
$ 2,721,439 $ 1,409,866 $ 1,311,573 93.0
NM - Not meaningful.
The following table presents casino and non-casino operating revenues (in
thousands):
Nine Months Ended September 30,
Increase/
2021 2020 (Decrease) Percent Change
Operating revenues
Casino revenues $ 1,615,228 $ 782,074 $ 833,154 106.5
Non-casino revenues:
Rooms 387,772 231,240 156,532 67.7
Food and beverage 435,152 250,007 185,145 74.1
Entertainment, retail and other 283,287 146,545 136,742 93.3
Total non-casino revenues 1,106,211 627,792 478,419 76.2
$ 2,721,439 $ 1,409,866 $ 1,311,573 93.0
Casino revenues for the nine months ended September 30, 2021 were 59.4% of
operating revenues, compared to 55.5% for the same period of 2020. Non-casino
revenues for the nine months ended September 30, 2021 were 40.6% of operating
revenues, compared to 44.5% for the same period of 2020.
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Casino revenues
Casino revenues increased primarily due to increased table drop, table games win and slot machine win at our Las Vegas Operations andEncore Boston Harbor , respectively, and increased VIP table games win and mass market table drop and table games win at our Macau Operations. Our Las Vegas Operations were closed to the public fromMarch 17, 2020 untilJune 4, 2020 .Encore Boston Harbor was closed to the public fromMarch 15, 2020 untilJuly 10, 2020 . Our casino operations inMacau were closed for a 15-day period inFebruary 2020 . The table below sets forth our casino revenues and associated key operating measures (dollars in thousands, except for win per unit per day): Nine Months Ended September 30, Percent 2021 2020 Increase/(Decrease) Change
Macau Operations (1):Wynn Palace : Total casino revenues$ 532,040 $ 208,449 $ 323,591 155.2 VIP: Average number of table games 96 97 (1) (1.0) VIP turnover$ 5,246,296 $ 6,823,955 $ (1,577,659) (23.1) VIP table games win$ 222,968 $ 113,007 $ 109,961 97.3 VIP win as a % of turnover 4.25 % 1.66 % 2.59 Table games win per unit per day $ 8,548$ 4,458 $ 4,090 91.7 Mass market: Average number of table games 227 209 18 8.6 Table drop$ 1,823,792 $ 583,599 $ 1,240,193 212.5 Table games win$ 406,016 $ 156,897 $ 249,119 158.8 Table games win % 22.3 % 26.9 % (4.6) Table games win per unit per day $ 6,555$ 2,889 $ 3,666 126.9 Average number of slot machines 708 586 122 20.8 Slot machine handle$ 1,107,058 $ 542,708 $ 564,350 104.0 Slot machine win$ 44,553 $ 24,796 $ 19,757 79.7 Slot machine win per unit per day $ 230$ 163 $ 67 41.1 Wynn Macau: Total casino revenues$ 379,610 $ 213,758 $ 165,852 77.6 VIP: Average number of table games 83 88 (5) (5.7) VIP turnover$ 4,629,987 $ 4,069,809 $ 560,178 13.8 VIP table games win$ 130,624 $ 130,143 $ 481 0.4 VIP win as a % of turnover 2.82 % 3.20 % (0.38) Table games win per unit per day $ 5,745$ 5,692 $ 53 0.9 Mass market: Average number of table games 239 219 20 9.1 Table drop$ 1,703,189 $ 752,058 $ 951,131 126.5 Table games win$ 321,236 $ 146,231 $ 175,005 119.7 Table games win % 18.9 % 19.4 % (0.5) Table games win per unit per day $ 4,914$ 2,564 $ 2,350 91.7 Average number of slot machines 583 509 74 14.5 Slot machine handle$ 802,337 $ 516,537 $ 285,800 55.3 Slot machine win$ 28,573 $ 18,993 $ 9,580 50.4 Slot machine win per unit per day $ 179$ 144 $ 35 24.3 Poker rake $ -$ 2,083 $ (2,083) (100.0) 36
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Nine Months Ended September 30,
Percent
2021 2020 Increase/(Decrease) ChangeLas Vegas Operations (2): Total casino revenues$ 305,253 $ 161,354 $ 143,899 89.2 Average number of table games 205 228 (23) (10.1) Table drop$ 1,258,733 $ 830,745 $ 427,988 51.5 Table games win$ 285,939 $ 166,196 $ 119,743 72.0 Table games win % 22.7 % 20.0 % 2.7 Table games win per unit per day $ 5,117$ 3,711 $ 1,406 37.9 Average number of slot machines 1,670 1,751 (81) (4.6) Slot machine handle$ 3,063,267 $ 1,650,517 $ 1,412,750 85.6 Slot machine win$ 209,682 $ 112,464 $ 97,218 86.4 Slot machine win per unit per day $ 460$ 328 $ 132 40.2 Poker rake $ 8,704$ 2,185 $ 6,519 298.4Encore Boston Harbor (3): Total casino revenues$ 398,325 $ 198,513 $ 199,812 100.7 Average number of table games 192 174 18 10.3 Table drop$ 890,777 $ 493,428 $ 397,349 80.5 Table games win$ 189,070 $ 104,814 $ 84,256 80.4 Table games win % 21.2 % 21.2 % - Table games win per unit per day $ 3,613$ 3,839 $ (226) (5.9) Average number of slot machines 2,268 2,330 (62) (2.7) Slot machine handle$ 3,204,272 $ 1,581,174 $ 1,623,098 102.7 Slot machine win$ 263,197 $ 122,906 $ 140,291 114.1 Slot machine win per unit per day $ 425$ 336 $ 89 26.5 Poker rake $ -$ 5,105 $ (5,105) (100.0) In response to the initial outbreak of COVID-19 in early 2020, each of our properties was subject to partial or full closure for varying lengths of time during 2020, and each has since reopened with certain COVID-19 specific protective measures in place. (1) Our casino operations inMacau were closed for a 15-day period inFebruary 2020 and resumed operations on a reduced basis onFebruary 20, 2020 . (2) Our Las Vegas Operations closed onMarch 17, 2020 and reopened onJune 4, 2020 . OnOctober 19, 2020 , Encore atWynn Las Vegas adjusted its operating schedule to five days/four nights each week due to reduced customer demand levels. This adjusted operating schedule remained in effect through the first quarter of 2021, and onApril 8, 2021 , Encore atWynn Las Vegas resumed full operations. (3)Encore Boston Harbor closed onMarch 15, 2020 and reopened onJuly 10, 2020 . In addition, onNovember 6, 2020 ,Encore Boston Harbor temporarily suspended hotel operations and overnight casino operations pursuant to a state directive limiting the operating hours of certain businesses, including restaurants and casinos. OnJanuary 25, 2021 , the limitations on operating hours were lifted, andEncore Boston Harbor restored 24-hour casino operations and reopened its hotel tower on a Thursday through Sunday weekly schedule. The property reopened its hotel tower to seven days per week as ofSeptember 1, 2021 . 37
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Non-casino revenues
The table below sets forth our room revenues and associated key operating
measures:
Nine Months Ended September 30,
2021 2020 Increase/(Decrease) Percent Change
Macau Operations:
Wynn Palace:
Total room revenues (dollars in thousands) $ 53,534 $ 26,647 $ 26,887 100.9
Occupancy 61.1 % 19.3 % 41.8
ADR $ 181 $ 283 $ (102) (36.0)
REVPAR $ 111 $ 54 $ 57 105.6
Wynn Macau:
Total room revenues (dollars in thousands) $ 39,025 $ 23,480 $ 15,545 66.2
Occupancy 60.0 % 24.4 % 35.6
ADR $ 217 $ 316 $ (99) (31.3)
REVPAR $ 130 $ 77 $ 53 68.8
Las Vegas Operations (1):
Total room revenues (dollars in thousands) $ 266,250 $ 163,419 $ 102,831 62.9
Occupancy 63.4 % 55.8 % 7.6
ADR $ 360 $ 323 $ 37 11.5
REVPAR $ 228 $ 180 $ 48 26.7
Encore Boston Harbor (2) (3):
Total room revenues (dollars in thousands) $ 28,964 $ 17,694 $ 11,270 63.7
Occupancy 84.1 % 74.6 % 9.5
ADR $ 320 $ 293 $ 27 9.2
REVPAR $ 269 $ 218 $ 51 23.4
(1) Wynn Las Vegas closed on March 17, 2020 and reopened on June 4, 2020 .
(2) Encore Boston Harbor closed on March 15, 2020 and reopened on July 10, 2020 .
(3) Encore Boston Harbor room statistics have been computed based on 158 days
and 121 days of operation in the nine months ended September 30, 2021 and 2020,
respectively, representing the number of nights hotel rooms were offered for
sale to the public. The property reopened its hotel tower to seven days per week
as of September 1, 2021 .
Room revenues increased $156.5 million , primarily due to higher occupancy at our
properties and the closure of our Las Vegas Operations from March 17, 2020 until
June 4, 2020 , resulting from the adverse effects of the COVID-19 pandemic.
Food and beverage revenues increased
Entertainment, retail and other revenues increased
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Operating expenses
The table below presents operating expenses (in thousands):
Nine Months Ended September 30,
Increase/
2021 2020 (Decrease) Percent Change
Operating expenses:
Casino $ 1,048,897 $ 734,689 $ 314,208 42.8
Rooms 136,187 139,787 (3,600) (2.6)
Food and beverage 354,709 314,335 40,374 12.8
Entertainment, retail and other 310,871 75,823 235,048 310.0
General and administrative 574,669 547,305 27,364 5.0
Provision for credit losses 7,461 60,548 (53,087) (87.7)
Pre-opening 5,455 5,614 (159) (2.8)
Depreciation and amortization 545,538 541,498 4,040 0.7
Property charges and other 26,569 43,701 (17,132) (39.2)
Total operating expenses $ 3,010,356 $ 2,463,300 $ 547,056 22.2
Total operating expenses increased $547.1 million compared to the nine months
ended September 30, 2020 , primarily due to increased casino, food and beverage,
entertainment, retail and other, and general and administrative expenses,
partially offset by decreased provision for credit losses and property charges
and other expenses.
Casino expenses increased $157.1 million , $84.2 million , $17.4 million , and
$55.4 million at Wynn Palace , Wynn Macau, our Las Vegas Operations, and Encore
Boston Harbor , respectively. These increases were primarily due to increased
gaming tax expense driven by the increase in casino revenues at each property.
Room expenses decreased
Food and beverage expenses increased$47.1 million at our Las Vegas Operations. The increase was primarily a result of higher operating costs related to the increase in food and beverage revenues as well as higher nightlife entertainment costs. Entertainment, retail and other expenses increased primarily due to marketing expenses incurred by Wynn Interactive. The increase was partially offset by a decrease in entertainment, retail and other expenses of$7.9 million at our Las Vegas Operations primarily as a result of lower operating costs. General and administrative expenses increased primarily due to an increase in corporate and other general and administrative expenses of$36.3 million , primarily due to a credit of$30.2 million for the net proceeds of a derivative action settlement recognized during the nine months endedSeptember 30, 2020 . In addition, general and administrative expenses increased$7.0 million atEncore Boston Harbor primarily due to the closure of our operations fromMarch 15, 2020 untilJuly 10, 2020 . The provision for credit losses decreased$23.5 million ,$24.0 million , and$3.4 million at our Las Vegas Operations,Wynn Palace , and Wynn Macau, respectively. The decreases were primarily due to the impact of historical collection patterns and expectations of current and future collection trends, as well as the specific review of customer accounts, on our estimated credit loss for the respective periods.
For the nine months ended
Depreciation and amortization increased
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Our property charges and other expenses for the nine months endedSeptember 30, 2021 consisted primarily of advocacy- related expenses of$12.5 million at Wynn Interactive and asset abandonments of$4.3 million and$4.1 million at our Las Vegas Operations andWynn Palace , respectively. Our property charges and other expenses for the nine months endedSeptember 30, 2020 consisted primarily of asset disposals and abandonments of$23.4 million and$9.7 million atWynn Palace andEncore Boston Harbor , respectively.
Interest expense, net of capitalized interest
The following table summarizes information related to interest expense (dollars
in thousands):
Nine Months Ended September 30,
Increase/
2021 2020 (Decrease) Percent Change
Interest expense
Interest cost, including amortization of debt
issuance costs and original issue discount
and premium $ 453,601 $ 408,439 $ 45,162 11.1
Capitalized interest - (1,252) (1,252) (100.0)
$ 453,601 $ 407,187 $ 46,414 11.4
Weighted average total debt balance $ 12,257,424 $ 12,050,631
Weighted average interest rate 4.93 %
4.51 %
Interest costs increased primarily due to an increase in the weighted average
debt balance and the weighted average interest rate. Capitalized interest
decreased due to the completion of the meeting and convention expansion in
Other non-operating income and expenses
We incurred a foreign currency remeasurement loss of$17.3 million and a gain of$13.0 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The impact of the exchange rate fluctuation of theMacau pataca, in relation to theU.S. dollar, on the remeasurements ofU.S. dollar denominated debt and other obligations from ourMacau -related entities drove the variability between periods. We recorded a gain of$6.6 million and a loss of$14.3 million for the nine months endedSeptember 30, 2021 and 2020, respectively, from change in derivatives fair value. We recorded a$2.1 million loss on extinguishment of debt for the nine months endedSeptember 30, 2021 related to the partial prepayment of the Wynn Macau Term Loan and the prepayment of the Wynn Macau Credit Facilities. We recorded a$4.6 million loss on extinguishment of debt for the nine months endedSeptember 30, 2020 primarily related to the partial prepayment of the Wynn Macau Term Loan.
Income taxes
We recorded an income tax expense of$2.3 million and$564.1 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The 2021 income tax expense primarily related to an increase in valuation allowance forU.S. deferred tax assets and theMacau dividend tax agreement that provides for an annual payment of MOP 12.8 million (approximately$1.6 million ) as complementary tax otherwise due by stockholders ofWynn Macau SA . The 2020 income tax expense primarily related to the increase in the valuation allowances forU.S foreign tax credits,U.S. loss carryforwards and otherU.S. deferred tax assets.
Net loss attributable to noncontrolling interests
Net loss attributable to noncontrolling interests was$177.0 million and$218.9 million for the nine months endedSeptember 30, 2021 and 2020, respectively. These amounts are primarily related to the noncontrolling interests' share of net loss from WML. 40
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Adjusted Property EBITDA
We use Adjusted Property EBITDA to manage the operating results of our segments. Adjusted Property EBITDA is net loss before interest, income taxes, depreciation and amortization, pre-opening expenses, property charges and other, management and license fees, corporate expenses and other (including intercompany golf course, meeting and convention, and water rights leases), stock-based compensation, change in derivatives fair value, loss on extinguishment of debt, and other non-operating income and expenses. Adjusted Property EBITDA is presented exclusively as a supplemental disclosure because management believes that it is widely used to measure the performance, and as a basis for valuation, of gaming companies. Management uses Adjusted Property EBITDA as a measure of the operating performance of its segments and to compare the operating performance of its properties with those of its competitors, as well as a basis for determining certain incentive compensation. We also present Adjusted Property EBITDA because it is used by some investors to measure a company's ability to incur and service debt, make capital expenditures and meet working capital requirements. Gaming companies have historically reported EBITDA as a supplement to GAAP. In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including us, have historically excluded from their EBITDA calculations preopening expenses, property charges, corporate expenses and stock-based compensation, that do not relate to the management of specific casino properties. However, Adjusted Property EBITDA should not be considered as an alternative to operating income as an indicator of our performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure determined in accordance with GAAP. Unlike net income, Adjusted Property EBITDA does not include depreciation or interest expense and therefore does not reflect current or future capital expenditures or the cost of capital. We have significant uses of cash flows, including capital expenditures, interest payments, debt principal repayments, income taxes and other non-recurring charges, which are not reflected in Adjusted Property EBITDA. Also, our calculation of Adjusted Property EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited. The following table summarizes Adjusted Property EBITDA (in thousands) forWynn Palace , Wynn Macau, Las Vegas Operations, andEncore Boston Harbor as reviewed by management and summarized in Item 1-"Notes to Condensed Consolidated Financial Statements," Note 17, "Segment Information." That footnote also presents a reconciliation of Adjusted Property EBITDA to net loss attributable toWynn Resorts, Limited . Three Months Ended Nine Months Ended September 30, September 30, Increase/ Increase/ 2021 2020 (Decrease) Percent Change 2021 2020 (Decrease) Percent Change Wynn Palace$ 12,112 $ (77,647) $ 89,759 NM$ 93,036 $ (178,379) $ 271,415 NM Wynn Macau (1,939) (34,457) 32,518 94.4 28,703 (97,895) 126,598 NM Las Vegas Operations 183,416 20,258 163,158 805.4 344,719 (77,383) 422,102 NM Encore Boston Harbor 64,565 25,986 38,579 148.5 141,844 (40,429) 182,273 NM Corporate and other (103,593) - (103,593) NM (187,961) - (187,961) NM NM - Not meaningful. Adjusted Property EBITDA atWynn Palace increased$89.8 million and$271.4 million for the three and nine months endedSeptember 30, 2021 , respectively, primarily due to an increase in operating revenues, partially offset by an increase in operating expenses. Our casino operations atWynn Palace were closed for a 15-day period inFebruary 2020 . Adjusted Property EBITDA at Wynn Macau increased$32.5 million and$126.6 million for the three and nine months endedSeptember 30, 2021 , respectively, primarily due to an increase in operating revenues, partially offset by an increase in operating expenses. Our casino operations at Wynn Macau were closed for a 15-day period inFebruary 2020 . Adjusted Property EBITDA at our Las Vegas Operations increased$163.2 million and$422.1 million for the three and nine months endedSeptember 30, 2021 , respectively, primarily due to an increase in operating revenues, partially offset by an increase in operating expenses. Our Las Vegas Operations closed to the public onMarch 17, 2020 , and reopened onJune 4, 2020 on a reduced basis. Adjusted Property EBITDA atEncore Boston Harbor increased$38.6 million and$182.3 million for the three and nine months endedSeptember 30, 2021 , respectively, primarily due to an increase in operating revenues, partially offset by an increase in operating expenses.Encore Boston Harbor closed to the public onMarch 15, 2020 and reopened onJuly 10, 2020 on a reduced basis. 41
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Adjusted Property EBITDA at Corporate and other was
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